powersetlogo1.bmpAfter raising a decent $12.5 million in cash last year, Powerset, the secretive search engine company that wants to take on Google by using “natural language” technology, is going to raise a larger round this year.

This and other gossip about Powerset spilled out Saturday evening during a lively party the company held at Frisson restaurant in San Francisco. Powerset investor, Charles Moldow, mentioned the funding plans to us, and asserted that this time, investors may be skeptical about pushing Powerset’s already high valuation even higher.

In an unfortunate video taken by PartyCrashers of the party, Pell also confirmed the plans, saying once you raise money, you start raising money over again. Troubling was a part at the end of the video (worth watching; see below, it is short), where one Powerset guy, clearly looking as if he had too much to drink, doesn’t express much confidence in the company’s abilities — or at least, it comes across that way.


Techcrunch’s Michael Arrington said earlier today that I gush about Powerset everytime I write about it. That’s the second time in four days he’s claimed that. Clearly, he’s upset that we continue to break news about Powerset, including its launch and sky-high funding last year. In fact, I’ve tried to be pretty even-handed, each time making sure to solicit input from Powerset’s biggest critics like Danny Sullivan or Google’s Peter Norvig. Our first story suggested the investment valuation was “crazy.” Powerset has a very long way to go, and we should make that absolutely clear. If Powerset hones its natural language technology into something usable — and it just may — it will become an acquisition candidate, if not for Google, then for Yahoo and for MSN. As a stand alone company, it is a still a very long shot.

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